Chief Innovation Officer Dilemma – Tough Time to be a Bank

Bank Chief Innovation Officers have a tough balancing act on their hands. They have to help the bank be digitally savvy, establish new markets, and capture new revenue streams and at the same time not place burden on existing business that brings current revenue.

In this complex, ever changing banking landscape, how do they decide where to focus finite amounts of time, talent and investment to drive business innovation and growth?

It’s a tough time to be a bank…

Banks are confronted with ferocious, asymmetric competition from FinTech and subject to increasingly complex, wide-ranging regulations. These are imposing ever-greater scrutiny on new and existing revenue streams - and adding enormous costs to P&Ls.

 …delivering innovation at high velocity is essential

 Digital disruption means leaders across the business are clamoring for rapid, breakthrough innovation. Some are pursuing it through their Chief Innovation Officers and others prefer to bypass them and do it themselves (usually by partnering with FinTech startups).  The sense of urgency is creating chaos within the organization with multitudes of other projects and priorities jostling for attention.

…one possible solution - Multi-speed Innovation

 The solution lies in mastering multi-speed Innovation - understanding how to shift to the right gear at the right time to achieve the right outcome.

Chief Innovation Officers that master this approach will position innovation as the engine for competitive advantage.

Multi-speed Innovation enables banking business needs to be delivered at differing velocities, allowing banks to compete at pace across all their key markets. It’s built on an operating model that incorporates three important and interconnected components:

1. Pace of Change: focused on multi-speed Innovation delivery

 The starting point is to establish a closer connection between the trajectories of business, marketing, operations, and IT. This recognizes the business need for various resource consumption (marketing, IT, operations etc.) at different speeds and balance provision of pace with large-scale traditional delivery vs. innovation execution.

2. FinTech Clarity: decoupling legacy systems

Leading Chief Innovation Officers should decouple FinTech platform(s) with legacy systems and avoid integrating the two. For e.g. Blockchain based trading and settling system should be maintained and kept separate from existing business set-up.  Simple and agile platforms should become core strategic assets to enable multi-speed innovation delivery.

3. Dynamic Support: flexibility in operating model and infrastructure

Multi-speed innovation requires a new operating model with business, marketing, operations, and IT interfaces driving closer alignment, new governance and change capabilities to allow full decoupling between innovations vs. more traditional development. The ability to deliver quickly and fail fast will have to exist alongside the skills required to deliver and maintain complex structural and risk-laden legacy systems

From harnessing innovation for differentiation to meeting customer expectations for seamless, connected services, banks are at the epicenter of a digital revolution. By mastering the art of multi-speed innovation, Chief Innovation Officers can become integral to their banks reaching its many new destinations.

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